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TWG, IREX Host Ambassador Steven Pifer
TWG joined with IREX (the International Research and
Exchanges Board) in a Friday Evening Forum June 26, 1998 that featured U.S. Ambassador to
Ukraine Steven Pifer.
In his presentation, the second before a TWG audience (he was hosted by TWG before departing for his assignment to Kyiv a half year ago), Mr. Pifer presented a sobering assessment of how things were going in Ukraine. If Ukraine does not bite the bullet on economic reform it faces the possibility of a financial crisis within the next year. It stands to lose $6 billion in potential low-interest international credits and will default on its ballooning domestic and foreign financial obligations. Mr. Pifer balanced his words of caution with an expectation that President Kuchma's recent decrees dealing with the economy is an indication that his government realizes this precarious situation and is finally willing to act. Ukraine faces three major challenges, he said it must restructure its economy, its political system and foreign relations. Of these the greatest challenge is economic reform. If there were to be another Asian and Russian financial crisis, he said, Ukraine would find itself in a position of not being able to borrow any money internationally or sell hardly any of its treasury bills domestically. At the same time, it would have to keep redeeming its high-interest monthly treasury bills and service its foreign debt. The best way out this predicament for Ukraine is through the $2.5 billion Extended Fund Facility credit program offered by the International Monetary Fund, which would lessen its dependency on its costly domestic T-bills that pay 45 to 50 percent on an annual basis. "You can't maintain that for long before you run into a situation where virtually all revenues are going to be consumed by treasury bill redemption and servicing the foreign debt," Mr. Pifer said. "Ukraine also has to improve its investment climate image," he said. "And, unfortunately, it's a very poor image," he said, pointing to the latest Harvard Institute for International Development survey of 53 emerging world economies which lists Ukraine in last place. "And it is scaring investors off," he added. Ukraine must work to eliminate excessive regulation, rationalize its tax systems, find a way to enforce contracts in order to win over foreign as well as Ukrainian investors and businessmen. Mr. Pifer said that a little over a week earlier he was fairly pessimistic about the Ukrainian government's economic reform plans. The situation changed dramatically a few days later, he added, when President Kuchma stated that he could not wait any longer for the Verkhovna Rada to pass his economic initiatives and began mandating them through presidential decrees. This decision has had a favorable impact on the last IMF mission to Ukraine, he said. If the IMF approves the EFF credits, Ukraine would be in a position to get $4 billion in World Bank loans. During the discussion, Mr. Pifer was asked why the refusal rate for Ukrainians seeking visas to visit the United States was higher than for citizens of other countries in that region. He said that he did not have statistics comparing his embassy's refusal rate with other consular posts in the region. The only comparison he could point to was to the refusal rate for Ukrainian visa applicants at the U.S. Embassy in Moscow which, he said, was four to five times higher than to other applicants. State Department inspection teams had looked into this problem in Kyiv and found the refusal rate "justified by the circumstances," he said, adding that that was his assessment as well. He pointed out that the consular officers have to work within the guidelines of a law that is essentially "un-American," mandating the presumption until proven otherwise that each visa applicant intends to break the conditions of the visa he requests. And there is a very high fraud rate in visa applicants from Ukraine, he said. The fraud is becoming very sophisticated, forcing the Embassy to apply more scrutiny and to raise the bar for all applicants, unfortunately. Ambassador Pifer was introduced to the audience by the new TWG President Orest Deychakiwsky and IREX President Daniel C. Matuszewski. |
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